THE LOW-HANGING FRUITS OF FINANCE
TBY talks to Moremi Marwa, CEO of Dar es Salaam Stock Exchange (DSE), on how to best improve the regulatory framework, fiscal incentives, and bringing the fruits of finance to as wide a swath of the population as possible.
BIOGRAPHY
Moremi Marwa joined the DSE in May of 2013, prior to which he had been CEO of the Tanzania Securities Limited brokerage firm since 2010. Moremi holds a bachelor’s in commerce and accounting and an MBA in finance, both from the University of Dar es Salaam. He has been a Certified Public Accountant since 2003 and is certified by the Financial Markets Association.What have been the main factors leading to the recent success of the DSE?
In 1Q2017, we made great advances, the result of efficiencies in investing our financial resources in relatively high-return financial instruments. Indeed, the balance sheet improved significantly from July 2016 following our IPO, the funds from which were invested in short-term financial assets. We have also earned significant income from listing activities, especially on fixed-income instruments. On the transaction income front, things have slowed somewhat, with a decline in trading activity in the market, for both fundamental as well as sentimental reasons. Total market capital-to-GDP ratio is still less than 20% of GDP. We recorded 7.2% growth in GDP in 2016; however, that was not reflected in the market cap—actually there was a drop in the listed companies' market cap despite the growth in GDP.
What diversified financial instruments does the DSE plan to roll out to create a more robust financial portfolio for the country?
The government's five-year development plan, and its emphasis on industrialization and human development will require considerable financial resources that can be mobilized in both the public and private sectors, either domestically or with foreign capital. It is estimated that in five years the economy has to mobilize close to TZS107 trillion for spending on capital investment on development plans, programs, and projects. Part of those funds will come from FDI; however, a significant part will also come from the local market. These funds will partly emanate from actions taken both from the fiscal side and from the monetary side. This is where the DSE comes in. Our role is to create an environment in which the government as well as private enterprises will see the benefit of using the capital market for mobilization of savings, and invest them productively in our economic development.
What is the timeframe for offloading these instruments onto the market?
There are almost 15 of these instruments we have in mind, and we thus need a staggered approach. The low-hanging fruit—which will focus on consolidating what we have already—includes enhancing issuance, liquidity, and performance of the existing cash-based products such as equities and bonds. The next stage is to enable lower-income individuals to participate in specific sectors, such as real estate development through the issuance of REITs or other specific sector via issuance of crowd funding products, and collective investment schemes that are subsequently listed in the stock market. For this, we need to work on the regulatory framework and fiscal incentives in order for these kinds of products to gain the necessary traction and appetite.
What has been the impact of the obligatory listings for mining companies and telecoms on the DSE?
The Electronic and Postal Communication Act (EPOCA) of 2010 was amended by the Finance Act of 2016, while the Mining Act of 2010, whose regulations in relations to conducting IPOs and listings were issued in October 2016, was then amended in February 2017. These require companies in these strategic sectors such as telecommunications and mining to offload 25% and 30% of their shares, respectively, to the public. These pieces of legislation have four key objectives. The first is economic empowerment and financial inclusion. There is no point of having GDP growth of 7% and above while the majority of citizens are excluded from it. The second objective is to facilitate the growth of the local capital market industry. Currently, the latter is not deep or liquid enough to be attractive for private enterprises or industrialists to consider raising capital or using it as an exit mechanism. The third objective is to encourage more transparency in Tanzania's corporate world. The fourth is increasing competition in the market in the long term, boosting tax revenue for the government.
THE LOW-HANGING FRUITS OF FINANCE
TABLE OF CONTENTS
Guest Speaker
Hon. Patricia Scotland, Secretary General, Commonwealth of Nations
TBY talks to Hon. Patricia Scotland, Secretary General of the Commonwealth of Nations, on the advantages of being a member of the Commonwealth, the need to celebrate diversity, and Tanzania's war against corruption.
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Libérat Mfumukeko, Secretary-General, East African Community (EAC)
TBY talks to Libérat Mfumukeko, Secretary-General of the East African Community (EAC), on Tanzania's importance to the EAC, the major achievements of regional integration, and obstacles ahead of a monetary union.
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Raymond P. Mbilinyi, Executive Secretary , Tanzania National Business Council (TNBC)
TBY talks to Raymond P. Mbilinyi, Executive Secretary of Tanzania National Business Council (TNBC), on its work to support the private sector in the country, tackling challenges in the economy, and clamping down on corruption.
read articleReview: Banking
The Quest for Depth
If Tanzania is to meet its 2025 vision of attaining middle-income status, it will need to corral its bank-centric financial and capital markets for greater depth by extending participation and rendering credit more accessible to SMEs, women, and the young to spur economic growth.
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Dr. Baghayo A. Saqware, Commissioner , Insurance, Tanzania Insurance Regulatory Authority (TIRA)
TBY talks to Dr. Baghayo A. Saqware, Commissioner of Insurance, Tanzania Insurance Regulatory Authority (TIRA), on achieving universal healthcare coverage, the brilliance of microinsurance, and how to partner with public and private entities to increase the industry's penetration.
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Legal Thunder
With the stepping down of Minister of Energy and Minerals Sospeter Muhongo in May 2017 over transparency issues and the introduction of three new laws that give the government the right to renegotiate or revoke existing mining and oil and gas rights, private players in the country are unsure of what future lies ahead. On the other hand, project-specific developments bode well for a sector in need of a breakthrough.
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Kapuulya Musomba, Managing Director, Tanzania Petroleum Development Company (TPDC)
TBY talks to Kapuulya Musomba, Acting Managing Director of Tanzania Petroleum Development Company (TPDC), on the planned expansion of the Mtwara-Dar es Salaam natural gas pipeline, entering northern industrial hubs, and empowering nascent industries.
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Marc Den Hartog, Managing Director, Shell/BG Tanzania
TBY talks to Marc Den Hartog, Managing Director of Shell/BG Tanzania, on the critical need for economies of scale, the importance of developing LNG for export, and why renewables must be taken into account in any long-term plan.
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Hon. Charles Mwijage, Minister, Industry, Trade and Investment
TBY talks to Hon. Charles Mwijage, Minister of Industry, Trade and Investment, on how to reach middle-income status, employing the private sector toward this end, and what sets the country apart from the rest of East Africa.
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Discoveries of Magna-tude
Despite being the second most common element in the universe, helium is in short supply on earth. With global reserves of the gas steadily dwindling, and demand steadily increasing, the discovery of a whopping 1.53 billion cbm of helium in underground chambers in Tanzania could not have come at a better moment.
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Gilliard W. Ngewe, Director General, Surface and Marine Transport Regulatory Agency (SUMATRA)
TBY talks to Gilliard W. Ngewe, Director General of Surface and Marine Transport Regulatory Agency (SUMATRA), on transportation budget allocation and cross-sector dialog and partnerships.
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Jared H. Zerbe, CEO, Tanzania International Container Terminal Services Limited (TICTS)
TBY talks to Jared H. Zerbe, CEO of Tanzania International Container Terminal Services Limited (TICTS), on regional trade flows and Tanzania's potential to take a leading role in orchestrating cargo movement.
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East Africa’s “Geneva”
If Rome wasn't built in a day, it is not surprising that Tanzania's project to revamp eight of its largest cities is entering its eighth year of implementation. A release of further funds from the World Bank has given the project a new lease of life.
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Lost in the Maize
Agriculture accounts for 30% of Tanzania's GDP, and the sector has experienced above-average output in recent years compared to the rest of the African continent. However, the sector's development is held back by poor rural farming practices and general infrastructure bottlenecks.
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Fred Kafeero, Tanzania Representative, Food and Agriculture Organization (FAO)
TBY talks to Fred Kafeero, Tanzania Representative of the Food and Agriculture Organization (FAO), on the organization's long-term support for Tanzania's development, recent initiatives in agriculture, and financing.
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Reap What You Sow
In 2006, the Tanzanian Ministry of Water and Irrigation set a target for Tanzania's agriculture sector: to irrigate 1 million ha of land by 2020. More than 10 years on and moving ever closer to the deadline, this target has not yet been met, though the first seeds are being sown.
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Hidden Gems
Tourism is frequently described as the jewel in Tanzania's economic crown. In 2016 alone, the industry contributed over USD2 billion in revenues. However, for at least three years, the government has expressed concern that tourism is not well distributed across the country.
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